Strategic planning context

The five-year period of this strategic plan will see many changes, opportunities and challenges in the operating environment of the Australian grains industry, globally and domestically.

The investment environment for primary industry RD&E is also changing, as industry, government agencies, research institutions and investors work together to strengthen collaboration and coordination and achieve better RD&E outcomes for Australia. This GRDC Strategic R&D Plan will harmonise with the implementation of the grains industry’s first national RD&E strategy.

In designing this five-year strategy, the GRDC has consulted widely and considered the objectives of all its stakeholders, to develop the set of corporate strategies and investment themes that will best deliver the RD&E outcomes that the Australian grains industry has identified.

Industry snapshot

The grains industry plays a vital role in Australia’s economy. Analysis by the Department of Agriculture, Fisheries and Forestry shows that in 2010–11 grains and oilseeds comprised Australia’s largest category of food exports, representing 24 percent of total agricultural exports. The grains industry also plays an important role in the health of Australia’s community, through its contribution to healthy foods, food security and environmental stewardship.

Grain growing occurs across the Australian landscape, under a wide range of conditions. Despite diverse challenges, the Australian grains industry is highly productive, and competes successfully in export markets while delivering high-quality products for domestic use.

Profile

Australian grain production is characterised by a predominance of winter cereals, produced across a wide area in a number of distinct agroecological zones with differing climate and soil characteristics and diverse management requirements. Pulses and oilseed crops are also significant, both in their own right and as break crops to assist weed, pest and disease control (and provide other benefits such as nitrogen fixation) in the dominant cereal rotation.

Geographically, the grains industry is defined by three broad agroecological regions, as described in Figure 1.

Figure 1 Australia’s main grain-growing regions

The Northern Region

Encompassing Queensland and northern New South Wales, has generally high inherent soil fertility, although there is increasing evidence that this has been run down over time. It has relatively high seasonal rainfall and production variability compared with the other two regions.

Both summer and winter crops are important for profit. Yield depends, to a significant degree, on conservation of soil moisture from summer-dominant rainfall. The Northern Region has the highest diversity of crop production, including maize, sorghum and tropical pulses as well as wheat, barley, winter-growing pulses and oilseeds.

The Northern Region is the largest source of Australia’s premium hard high-protein wheat for export and domestic use. Demand for feed grains from the region’s important livestock industries is a key driver of grain production.

The Southern Region

Encompasses south-eastern Australia, including central and southern New South Wales; Victoria; Tasmania; and south-eastern South Australia.

It has a diverse suite of soils of generally low fertility and with many subsoil constraints, such as salinity, sodicity and toxic levels of some elements, although there are also some areas with very productive soils. Yield potential depends on seasonal rainfall, especially in autumn and spring, and there is less dependence on stored soil moisture than in the Northern Region.

Crop production systems are varied and include many mixed farming enterprises with significant livestock and cropping activities.

The Western Region

Comprises the cropping areas of Western Australia, where soil fertility is generally low to very low, and yields depend on winter and spring rainfall.

In many areas, yields are low by world standards; this is compensated for by the large scale and degree of mechanisation of the enterprises. Long-term variability in seasonal rainfall and production is lower in the coastal areas than in the Northern and Southern regions.

Wheat, barley, canola and lupins are the dominant crops, with livestock enterprises in mixed farming systems often of less importance. The Western Region has a relatively small population and feed industry, and consequently exports more than 85 percent of its grain production.

Production

Australia’s grains industry produced an average of 34 million tonnes of grain each year between 2006–07 and 2010–11. For that five-year period the average area sown to grains each year was 20 million hectares (similar to the average for the 10-year period from 2001–02 to 2010–11), and the industry had an average annual gross value of production at the farm gate of more than $9 billion.

As Figure 2 demonstrates the average level of production masks substantial differences in yearly production statistics. These differences primarily reflect differences in rainfall. For example, while total grain production reached nearly 46 million tonnes in 2005–06, in the following year production was less than half that amount because of much lower than average rainfall in many cropping regions. Managing the risks associated with variable climate is a crucial challenge for the industry.

The grains industry’s rate of growth in total factor productivity (TFP)—the ratio of the total quantity of outputs to total inputs—has been strong and sustained. From the late 1970s through to 2007–08, the Australian broadacre grains industry experienced an average annual rate of TFP growth of 1.9 percent, well above the annual rates of other rural commodities and Australian industry as a whole. TFP growth was not evenly spread within the grains industry or its regions: specialist croppers in some regions achieved rates of more than 3.5 percent per year over two decades or more, a remarkable achievement for any industry. Specific drivers of the grains industry TFP growth have included better varieties, improved agronomy, more efficient equipment, and improved business skills and decision-making, all combined in the form of grower innovation.

In recent years, TFP growth has slowed, in part reflecting the impact of a prolonged drought. Regaining the momentum in productivity growth, especially as a key response to the continuing decline in grain growers’ terms of trade, is a high priority for the industry and is reflected in this plan.

Figure 2 Grain production in Australia, 2000–01 to 2010–11

Markets

In Australian Commodities December 2010, the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) showed that 55 percent of the 38 million tonnes of grains produced in Australia in 2010 was exported (with a total value of $6 billion).

Australian grain production also underpins Australia’s domestic food processing sector, including the milling, malting, brewing and baking industries, while Australian feed grains underpin intensive animal production in the beef, lamb, pork, dairy and poultry industries. ABARES statistics show that, in 2010, the Australian flour milling industry consumed 2.8 million tonnes of wheat; the domestic consumption of malt barley was 850,000 tonnes; and more than 10 million tonnes of grain (wheat, barley and sorghum) was consumed in the intensive livestock industries.